Question

You deposit $200 each month into an account earning 1.25% interest compounded monthly.

How much will you have in the account in 20 years?
How much total money will you put into the account?
How much total interest will you earn?

Answer 1

Explanation:

The interest rate of 1.25% compounded monthly means that the interest earned each month is 1.25% of the current balance. Here's how you can calculate the final balance in the account after 20 years:

First, calculate the interest earned each month: $200 * 1.25% = $2.50

Then, add the interest earned to the monthly deposit to get the new balance: $200 + $2.50 = $202.50

Repeat this process for 240 months (20 years x 12 months/year).

The final balance in the account after 20 years would be approximately $71,934.24.

To find the total money you will put into the account, simply multiply the monthly deposit by the number of months: $200 * 240 = $48,000.

To find the total interest earned, subtract the initial deposit from the final balance: $71,934.24 - $48,000 = $23,934.24

So, in 20 years, you will have put a total of $48,000 into the account, and you will have earned a total of $23,934.24 in interest.